This is the 2nd budget (and the 1st Spring budget) by Phillip Hammond. It is a relatively light touch affair reflecting the fact the Autumn Budget will take precedence going forwards.
How is UK PLC doing?
Well, the good news is that 2017 growth has been revised up from the previous autumn statement of 1.4% to now 2%. The not so good news is that 2018/19/20 has been revised down a touch, no doubt as a result of the uncertainties that lie ahead with regard to Brexit.
Flash Summary for Business
We are still going digital! Most businesses will need to keep digital records and submit quarterly updates by 2018.
Next Level Business clients are already digital and well positioned for this ‘making tax digital’ transformation so we will be focusing on advising you and making the most of your business whilst others run around trying to catch up.
For everyone else, talk to your accountant now.
- Lower Corporation Tax – reconfirmed in the Spring Budget, from 20% to 19% starting 1 April 2017, 17% starting 1 April 2020. As low as 10% from 1 April 2017 for profits derived from patents.
- Increase in Personal Allowance – reconfirmed in the Spring Budget for owner managers, this useful increase from £11k this year to £11,500 from April 2017 and £12,500 by 2020 helps along with the increase in the higher rate threshold from £43,000 to £45,000 from April 2017 and £50,000 by 2020.
- Business Rate Support – limits on the increase in business rates and a £300m fund to help businesses transition.
- Dividend Allowance – along with the changes to dividend tax in April 2016 where a £5,000 nil band for dividends was introduced alongside a 7.5% basic rate dividend tax rate this dividend allowance has now been cut to £2,000 from April 2018. It means more dividends in the 7.5% band, costing owner directors £225 more in tax each year.
- Increase in Employers National Insurance – Class 4 NI paid by high-earning self-employed (sole traders) will increase from 1% to 10% in April 2018 and 11% in April 2019. This does not impact those trading through a Ltd company. Although this equates to only 60p for every self-employed person per week the higher earners will see a dramatic tax increase possibly running into thousands.
- National Living Wage – this will increase to £7.50 from April 2017 from the £7.20 only recently introduced in October 2016, making it a little more costly to employ people to the tune of £624 per year for a standard 40 hour week.
More detail will unfold in due course and our mobile app will get updated with the latest news, rates and calculators over the coming days for those who like to punch in the figures and see the impact.
We still think the Limited company status and benefits remain strong for small businesses of all shapes and sizes if well setup. It is now more important than ever to plan. Contact us if you want to have a review or tax planning session.